(Alliance News) - Electrocomponents PLC on Thursday unveiled two new acquisitions, and has proposed a GBP180 million placing to pay for the deals.
Electrocomponents has reached an agreement to acquire Synovos, an integrated supply solutions in the Americas, and has acquired Needlers, a UK provider of safety products and PPE, for a total consideration of about GBP150 million on a debt-free, cash-free basis.
The Synovos deal will cost about GBP110 million, while Electrocomponents has agreed to pay GBP40 million for Needlers.
Electrocomponents believes the deals are "strategically and financially compelling".
"The building blocks are in place and we are accelerating the execution of our growth strategy," the company added.
Chief Executive Lindsley Ruth said: "Both Synovos and Needlers are very good businesses, aligned to our strategy of selectively adding high-quality, value-creating bolt-on acquisitions to the group.
"Synovos enables us to expand our value-added solutions offer in the Americas, significantly enhancing our proposition for corporate customers. It is an excellent fit with our existing IESA business and will increase our ability to support clients in managing their procurement, inventory and maintenance needs globally. Needlers is a very high-quality business that we have been following for a long time and significantly enhances our safety, hygiene and PPE offering which is a critical capability in today's world."
To pay for the acquisitions, Electrocomponents has proposed a GBP180 million placing, with the total number of shares expected to represent about 5% of its issued share capital.
The placing price will be determined following the bookbuild. Shares in the industrial and electronics products distributor were 4.7% higher in London on Thursday morning at 853.50 pence each.
Part of the placing will take be in the form of a retail offer, taking place on PrimaryBid.com, Electrocomponents noted.
UBS and Numis Securities are acting as joint bookrunners.
Ruth added: "In the past five years we have transformed Electrocomponents into a strong, focused, customer-centric organisation on a clear growth trajectory. We are now taking the business to the next level. Whilst driving organic growth will always be our primary focus, Synovos and Needlers demonstrate how our disciplined approach to acquisitions can bring valuable capabilities and products into the group.
"The placing will allow us to maintain a strong financial position to support continued investment in our organic growth strategy, while retaining flexibility to make further bolt-on acquisitions from the attractive pipeline that we have established over recent years."
Turning to trading, Electrocomponents said it has seen "continued momentum" over the first 10 weeks of the second half, with all regions in growth.
By Paul McGowan; paulmcgowan@alliancenews.com
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